Advanced Energy AEIS recently announced that it has completed the acquisition of a radio frequency (RF) equipment maker, Versatile Power. However, the financial terms of the transaction are still kept under wraps.
Based in CA, Versatile Power is a leading provider of RF and programmable power supplies for medical as well as industrial applications.
The deal will enhance Advanced Energy’s presence in the medical device market.
Benefits of the Deal
Versatile Power is believed to be a strategic fit for Advanced Energy.
Notably, the buyout will create strong growth opportunities for the company in the medical device market. Versatile Power’s suite of expanding medical solutions will compliment Advanced Energy’s product portfolio and further help to shape the company’s growth trajectory in the near term.
The buyout is also likely to help Advanced Energy in expanding customer base across the United States.
Per a report by Markets and Markets research firm, the global medical supplies market will reach $133.5 billion by 2025 at a CAGR of 4.6%. The growth will be majorly driven by the increasing prevalence of chronic diseases across the globe, growing government and corporate investments in healthcare projects and for infrastructure development, along with rising demand for infection control measures as well as medical devices.
Considering the medical supplies market prospects, Advanced Energy is poised to gain from the deal. In the last reported quarter, Industrial & Medical revenues rose 57.7% year over year to $87 million (accounting for 22.3% of revenues).
From financial perspective, the deal is expected to be accretive to earnings within this year.
Advanced Energy Industries, Inc. Price and Consensus
Advanced Energy Industries, Inc. price-consensus-chart | Advanced Energy Industries, Inc. Quote
Zacks Rank, Price Performance and Estimate Revisions
Advanced Energy, with approximately $4.3 billion market capitalization, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for the company’s earnings is pegged at $5.10 for 2020 and $5.61 for 2021. One estimate for the current year and three estimates for 2021 have moved north over the past 60 days against no southward revision, reflecting analysts’ confidence in the company. Moreover, the Zacks Consensus Estimate for the current year has increased 17.5% over the same period. Also, the Zacks Consensus Estimate for 2021 has inched up 13.2% to $5.58.
A glimpse of its price trend shows that the stock has had an impressive run on the bourses in the past year. Advanced Energy has rallied 56.8% compared with the S&P 500 market gain of 18.3%.
The company remains optimistic regarding its power supplies for medical applications. Solid demand for the company’s power supplies for medical applications amid growing clout of critical care medical devices is expected to contribute to the top line in 2021.
Other Stocks to Consider
Other top-ranked stocks in the broader technology sector include Alphabet GOOGL, Etsy, Inc. ETSY and Inuvo, Inc. INUV, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Alphabet, Etsy, and Inuvo is currently projected at 16.9%, 29.2% and 30%, respectively.
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